Yet another shocking development in the automotive industry occurred today as General Motors announced the filing of a RICO lawsuit against Fiat Chrysler Automobiles and former FCA executives. RICO stands for Racketeer Influenced and Corrupt Organizations.
These former execs (Al Iacobelli, Jerome Durden and Michael Brown) have already pled guilty in an ongoing federal corruption probe, headed by the U.S. Attorney’s Office in the Eastern District of Michigan.
The lawsuit, which also identifies late FCA CEO Sergio Marchionne in the complaint, is said to expose a long-term pattern of corruption that FCA used to “undermine the integrity of the collective bargaining process,” thus causing GM substantial damages.
“This lawsuit is intended to hold FCA accountable for the harm its actions have caused our company and to ensure a level playing field going forward,” stated GM executive VP, Craig Glidden.
“We have alleged in the complaint that Mr. Marchionne is responsible for conceiving, executing and sponsoring the alleged wrongdoing. We have no present intent to pursue the UAW. Our focus is on FCA. We believe the responsibility firmly rests on the orchestrater of the wrongdoing … and we plan to hold FCA responsible.”
The press release sent out by GM also specifies that FCA “was the clear sponsor of pervasive wrongdoing, paying millions of dollars in bribes to obtain benefits, concessions, and advantages in the negotiation, implementation, and administration of labor agreements over time.”
It goes on to say that FCA “corrupted the implementation of the 2009 collective bargaining agreement. It also corrupted the negotiation, implementation, and administration of the 2011 and 2015 agreements.”
The result of all this was unfair labor costs and operational advantages, hence the harm GM feels it has sustained. GM plans to invest all damages recovered from this lawsuit in the U.S. so as to benefit its employees and further grow jobs.
Who are these former FCA execs?
Iacobelli was vice president of employee relations at FCA, tasked with negotiating and implementing labor relations with the UAW. Durden meanwhile was a financial analyst at FCA, whereas Brown was director of employee relations for the automaker – and also involved in the UAW negotiations.
What type of damages has GM endured?
Glidden stated that his company cannot comment right now on the amount or measure the amount of damages until those figures can be properly analyzed. However, GM said that FCA has an $8 per hour total labor cost advantage due to the corruption scandal. GM pays $63 per hour as an average total labor cost, compared to FCA’s $55 per hour.
The GM VP added that this lawsuit has nothing to do with their recent work stoppage and that it will not change the 2019 contract agreement GM’s 46,000 UAW workers ratified last month.
Will this impact the PSA Group?
It remains to be seen if this lawsuit will in any way affect Fiat Chrysler and the PSA’s agreement to merge and create the world’s fourth largest OEM.
Note: The opening image is a CS photoshop